CHICAGO—Many high-tech companies in the metro area have set their sights on downtown properties in the hopes of attracting younger workers that have tired of the suburban lifestyle. But others have decided to make a long-term commitment to the suburbs. Nokia Solutions and Networks’ research and development building in suburban Arlington Heights, for example, has just been sold by Torburn Partners to Griffin Capital Essential Asset REIT, Inc., for $29.54 million.
And NSN, a subsidiary of Nokia, will fund a $10 million renovation of this single-story, 214,185-square-foot building at 1455 W. Shure Dr. on the NSN campus once occupied by Motorola Solutions Inc. NSN hopes to make it attractive to the workforce’s next generation.
As the primary R & D facility for their mobile broadband business, “this is a very critical component of the NSN operation,” says Don Pescara, the managing director of acquisitions for California-based Griffin Capital Corporation. He recognizes that many office buildings in the immediate area have a high vacancy rate, but since NSN has signed a 12-year triple net lease and decided to pour $10 million into the building, he has a great deal of confidence in their new asset.
“If you had asked me a year ago, I would have said that the northwest suburbs were not the place we wanted to be,” Pescara adds. Griffin focuses their attention on core assets that are stable and produce solid revenue, qualities increasingly hard to find in the northwest suburban corridor. By the end of this year’s first quarter, the submarket’s vacancy rate hit 21.7%, the highest in the suburbs, and up from 21.4% at the end of 2012, according to data from Colliers.
But Torburn, which purchased the entire five-building, 1,120,871-square-foot, 64-acre campus along Route 53 and Dundee Rd. for about $28 million earlier this summer, agreed that Griffin should take over the portion of the campus that NSN wants to use on a long-term basis. Torburn, a Northbrook-based company known for its value-added projects, plans to take on the difficult task of renovating and leasing the remainder.
“That’s going to require time, and it’s going to require money,” says Joe Learner, executive vice president and branch manager of Studley’s Chicago office. But the low purchase price secured by Torburn should allow very competitive rental rates. Furthermore, some local companies still find these low-rise, campus-style offices appealing. “They’re a little less generic than many other buildings that show up in the vacancy statistics. They’re not just another uninspired 12-story building attached to a big mall.”
NSN plans to relocate employees to the northern portion of the campus while they refurbish 1455 W. Shure Dr. on the southern end. The telecom provider plans to lighten up 1455 with more open spaces, green spaces, and other improvements, and then consolidate their operations.
“The intent is to be wholly situated within the year in Building 1455,” says a NSN spokesperson. “The decision is part of a site efficiency plan underway within North America since 2012.”
“This is a very significant tenant and a very significant commitment on their part,” says Pescara. He believes the consolidation and renovation should help retain the many of the older, ex-Motorola engineers who still work at the site, and attract those younger workers who increasingly populate the CBD.
“The likelihood of [NSN] renewing the lease is very high.” So high, in fact, that if this building was “located in Ft. Wayne, Indiana, we would still be interested in that acquisition.”